Abnormal increase in share price of SIP

Industrial zones have been expecting the sector to benefit from CPTPP agreement and the movement of companies from China to Vietnam.

SIP is known as a company operating in industrial zone sector.

SIP is known as a company operating in industrial zone sector.

However, an eight-fold increase in share price of Sai Gon VRG (SIP) has been in focus recently.

Management took heavy profits

On 6 June 2019, SIP was first listed on the UPCOM at a reference price of VND 17,200/share. Although the stock was listed on the stock exchange amidst difficulty in the stock market, the share price surged 40% on the first trading day to VND 24,000/share with a thin trading amount of 100 shares. After the first trading day, many investors expected the stock to step back in line with the general market trend.

However, the share price of SIP continued increasing strongly. The share price even reached VND 140,000 on 19 August, a rocket high of 820% compared to the reference price two months ago.

Note that, when the share price approached VND 100,000/share, many managers of the company registered to sell most of their shares, in which Tran Nhu Hung, Deputy CEO, registered to sell 400,000 shares, Lu Thanh Nha, Deputy CEO cum Chief Accountant, registered to sell 1mn shares, Tran Manh Hung, Chairman cum CEO, registered to sell 450,000 shares, Tran Ngoc Nhan, Deputy CEO, registered to sell 177,900 shares, Bach Van Nhan, BOD member, registered to sell 20,000 shares and Nguyen Truong Khoi, Deputy CEO, registered to sell 40,000 shares.

Furthermore, Nguyen Thanh Tung, Deputy CEO, just registered to sell 14.3mn shares to reduce his stake from 22.15% to 1.37%. Most managers registered to sell their shares for reasons that they needed financial resources. However, experts thought that they just took profit when share price went high. Nguyen Thanh Tung’s proceeding from this sale are estimated at VND 1,800bn.

Management lowered 2019 target

Although key management members had registered to sell the stocks, the share price has still gotten higher. This makes investors more doubtful about the share price movement given the bad performance of this company in 2019.

Over the last few years, the growth of revenue and profit of SIP was mostly above 20%. In 2018, SIP achieved revenue of VND 3,239bn, an increase of 26% YoY, and profit of VND 249bn, a surge of 34% YoY. The EPS company in 2018 was VND 3,600/share while the cash dividend was 18%. However, in 2019, the company suddenly set a lower target for this year with revenue of VND 3,000bn (-7% YoY) and profit of VND 200bn (-19% YoY).

According to the company management, the plans are built based on the difficulties of the current economy. Furthermore, SIP, in coming times, will focus more on its core businesses which are construction and investment. However, the result of second quarter that SIP has just announced was opposite to what the management said. SIP revenue and profit before tax reached VND 1,976bn (+34% YoY) and 214bn (+65% YoY), respectively. So, SIP has passed its full year target just within the first six months.

According to the 2018 and Q1/2019 financial statements, the book value of SIP is estimated at VND 33,100/share.
SIP is known as a company operating in industrial zone sector, hence, it has benefitted a lot from the growth of this sector. SIP currently owns four industrial zones with total area of 2,280 ha. The main source of its earnings has been from industrial zone services.

The advantage of SIP is that most of its industrial zone projects are located in key economic areas in the South, including Ho Chi Minh City, Binh Duong and Tay Ninh. Most projects are long term investments, above 10 years and are leased out at higher rate than the industry’s average.

Easy to manipulate stock price

SIP was established in 2007 as a unit of Vietnam Rubber Group (GVR). Currently the chartered capital of SIP is VND 690.5bn, in which 81.32% stake is of big shareholders, including GVR (13.53%), NTC (9.02%), An Loc JSC (10.67%).

The biggest shareholder previously was Nguyen Thanh Tung with stake of 22.15% (15.2mn shares). However, he has just registered to sell 14.3mn shares from 9 August to 6 September. Market expects Nguyen Thanh Tung will not be a big shareholder after 6 September.

Besides the four key above owners, the remaining shares are mainly in hands of people in the previous list who registered to sell the shares. This means that majority stakes of SIP are owned by some persons, hence, it is easy to manipulate the share price.

In the first four trading days, no shares sold out. In the next several trading days, only about 100 shares were sold to push stock price to the ceiling. As the trading volume was very thin, hence, so far no one knows who the buyer was of these shares.

We may have to wait until 6 September, after Nguyen Thanh Tung announces his trading result, to determine who was the one spending thousands of billion dongs to buy SIP. It also should be the time for authorities to determine whether SIP has been manipulated to get maximum advantage.

Kim Giang

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